Americans have spent the past two and a half decades on the biggest shopping spree in world history. Ranging from new houses, to new cars and everything in between, Americans now have undisputed claim on the title of the most prolific shoppers in the world. Unfortunately, as with any shopping spree, there comes a time to pay the bills. Yes, it’s true that what goes up must come down.
For several weeks now one of the most popular debates has been about the definition of a recession and if we are currently in one. The question is irrelevant. What matters is that we as Americans realize that we have some self destructive practices and that we take this time as an opportunity to fix them.
Here are a few random thoughts from the soap box that may identify some of our pitfalls and how to avoid them in the future.
Anything that does not provide value will not survive.
From the tech boom and bust in the late 90’s to the housing crunch that we’re in now, things that live on self generated hype don’t last. It’s a simple equation, if supply exceeds demand watch out.
Credit is not a replacement for cash.
This is perhaps the biggest problem facing Americans today. An entire generation has grown up believing that credit and cash are interchangeable. Credit erodes long-term buying potential. It’s like a big razor blade that ensures that your snowball will never get much larger than it is today. Of course there are good times and uses for credit but using it to cover out of control spending is a recipe for disaster.
All debts are eventually paid by someone.
When a debt goes into default, the lender will recoup the loss. In most cases, that loss is recouped by more aggressive lending fees and higher interest across the board. While it’s true that sometimes it is unavoidable to default on a loan, this should not be even on the options list until it is clear that it is simply impossible to make repayment. Today, default is the first option on the list.
The wealthiest companies in the world are banks.
Forbes recently released it’s list of top companies in the world for 2008. It should be no surprise that three out of the top five were banks. Banking is the most profitable industry in the world. These companies got to that position by taking your deposits and loaning them back to you with interest. What a concept.
There is no success without effective work.
There are a million and one schemes out there to avoid work. Stop wasting time and do the work. Many believe that it’s enough to simply work hard but that won’t do it either. If you want to get ahead or get out of a mess you have to learn how to work effectively. You can only achieve that if you set goals and measure the results.
Money is a tool.
Too many people give money far too much credibility. It’s only a tool. It can help you to get where you want to be but it will not take the place of good sense. The vast majority of people who get lucky with money find themselves right back at the beginning after a few years. Learning how to use money is a requirement if you don’t want it to use you.
If you buy more than you sell, you will go broke.
Yes, it is a simple concept but it’s one that remains elusive for many. If spending exceeds income plus savings, over time you will go broke. The only thing that can stop that process is to increase income or reduce costs.
Creativity before capital.
Spending money to resolve a problem should not be the first line of defense. A little creative energy can often resolve a problem while teaching valuable skills for the future. That’s a win, win.
Dependance is not freedom.
It is impossible to be free if you’re dependant on someone else. Americans have become dependant on someone else to do basically everything. We have stopped making things for ourselves and have become angry that our livelihoods are going somewhere else. In essence, we have outsourced ourselves.
Decisions will be made, with or without you.
I love the lyric in the Rush song “Free Will” that goes “…if you choose not to decide, you still have made a choice”. It’s as relevant today as it was when it was released. Refusing to choose is taking the default choice. If you allow this to happen, someone else will happily take advantage of your willingness to help them achieve their dreams.
“Just do it” means that you will likely be “doing it” over.
This makes for a great sportswear commercial but this is a huge problem in America. We tend to make decisions without understanding the situation well. This lack of analysis is completely evident in American business. American managers tend to make a decision based on nothing more than the recommendation from a vendor or one of their subordinates. This is a deadly disease in the American management style and one that has cost us severely.
American Idol should tell you something.
Look, it takes more than a positive outlook on life to do something well. There are plenty of quick pseudo religions out there that are telling you that you can do anything that you want to do if you have a positive outlook. It is simply not true. A positive attitude is the single most important soft skill that you can have. It is absolutely critical to keep your mind free from negativity if you’re ever going to achieve anything of value. However, it is a soft skill. Without significant hard skills or natural talent a positive attitude won’t cut it. Don’t believe me? Take a look at American Idol and notice how surprised the contestants are when they are told that they can’t sing. In some cases, they’re completely terrible but they don’t know it because they have been listening to this overly positive psychobabble their entire lives. If you want to be good at something you must be able to analyze yourself critically and replace bad with good.
America is in the toughest spot that it has been in since the late 1970’s. However, if we take the time to understand our problems and take corrective action, we can come out of this downturn as a stronger and more resilient nation. The future is, as always, in our hands.
Until next time, happy blogging.
Megadisclaimer: Take nothing at face value. Everything on this blog is for entertainment purposes. It won’t change the world, or even your opinion in most cases. If you believe everything that you read stop reading now!